SoftBank to raise $41 bn to buy back shares and reduce debt

SoftBank Group said on Monday it is selling or monetizing up to 4.5 trillion yen or $41 billion in assets to buy back 2 trillion yen of its shares and reduce debt, Reuters reported.
The share buyback will be in addition to the up to 500 billion yen buyback announced earlier this month.

The buyback tops the $20 billion in purchases sought by activist hedge fund Elliott Management, which has put pressure on SoftBank to improve shareholder returns, and will see the company retire 45 percent of its shares.

The asset sales come during a growing financial squeeze on SoftBank and its $100 billion Vision Fund, which has recorded two consecutive quarters of losses as its tech bets fall short, with global economic growth sputtering due to the coronavirus pandemic.

SoftBank did not specify what would be sold.

SoftBank CEO Masayoshi Son’s plan to fund the initial 500 billion yen buyback with debt was received negatively by analysts and investors who were concerned by Son’s willingness to leverage the company.

Beyond the share buyback, proceeds will be used for repaying debt, buying back bonds and boosting cash reserves, reflecting Son’s “firm and unwavering confidence” in the business, it said in a statement.

SoftBank may look to monetize its stakes in the merged Sprint and T-Mobile US or Chinese ecommerce giant Alibaba, Redex Holdings analyst Kirk Boodry said.

Son previously offloaded part of the stake in Alibaba, of which SoftBank currently owns 25 percent, in a complicated transaction ahead of the 2016 purchase of chip designer Arm.